Weekly Industry Crib Sheet: U.S. Economy up Despite Drop in Government Spending
June 3, 2013
Plus: Durable Goods Orders Up 3.3 Percent in April Consumer Confidence Grew Last Month Construction Spending Falls in First Quarter Jobless Claims Inch Up The first quarter Gross Domestic Product (GDP) was revised up last week to a 2.4 percent annual growth rate. The increase is slightly less than economists' predictions of 2.5 percent. The modest growth is due to a rise in many indicators, including consumer spending, residential construction, and stock prices. Despite the growth, all is not good news. Consumer spending, which accounts for 70 percent of economic activity as measured by GDP, was up 3.4 percent, beating expectations. Residential construction increased 22.1 percent. CBS News Corporate profits were up 3.6 percent from the same period last year, but fell 2.2 percent in the first quarter overall. Government spending was also down. This is the 10th time spending dropped in the last 11 quarters. Federal spending declined 8.7 percent in the first quarter, compared with 14.8 percent in the fourth quarter last year. Defense spending also dropped by 12.1 percent. Based on this and further pending budget cuts, economists are now predicting only 2 percent growth in GDP for the second quarter. Durable Goods Orders Up 3.3 Percent in April Data from The U.S. Commerce Dept. Reuters To his point, shipments of manufactured durable goods were down in April, slipping 0.6 percent to $227.1 billion. The drop followed two consecutive months of increases -- 0.9 percent in March and 2.1 percent in February. Unfilled orders and inventories were both up slightly. Unfilled orders rose 0.3 percent ($2.7 billion) to $996.2 billion, while inventories increased by 0.4 percent ($1.3 billion) to $377.9 billion. Consumer Confidence Grew Last Month American consumer confidence reached a five-year high in May, according to an industry report released last week. The Conference Board "Consumers' assessment of current business and labor-market conditions was more positive and they were considerably more upbeat about future economic and job prospects," Lynn Franco, director of economic indicators at The Conference Board, said in a statement Of those surveyed, 18.8 percent said business conditions were "good," while 26.0 percent said conditions were "bad." Further, 10.8 percent of respondents also felt jobs were becoming more plentiful, up from 9.7 percent, while those who felt jobs were more scarce dropped to 36.1 percent from 36.9 percent. Those who felt the economy would improve over the next six months rose to 82.4 from 74.3 in the expectation index, while the short-term analysis ("the situation index") rose to 66.7 from 61.0. Construction Spending Falls in First Quarter Despite a slight uptick in February, construction spending fell 1.7 percent in March, marking the second decline in three months, reflecting cuts in government projects, according to new U.S. Census Bureau data While residential construction improved by 0.7 percent to $301.6 billion seasonally annual adjusted rate (SAAR) in March, nonresidential building construction plunged 2.2 percent to $290.7 billion the same month after an uptick of 1.3 percent in February. Heavy engineering (non-building) construction also declined in March by 3.7 percent to $264.4 billion (SAAR) after a 1 percent increase during the previous month. March activity was weak across state and local governments, declining by 4.2 percent, and federal construction projects also fell. According to the Associated Press Despite the declines, the report also indicates construction spending improved on a year-to-year basis, with total construction spending totaling $181.7 billion during the first three months in 2013, compared to 173.6 billion during the same period in 2012. Jobless Claims Inch Up The U.S. Dept. of Labor The four-week moving average, which is used to smooth out volatility in the weekly numbers, increased slightly to 347,250. Even with the increase, the average is below the 350,000 benchmark for a moderately growing job market. The total number of insured unemployed fell for the week ending May 11, the earliest date for which there is data, to 4,578,592. This is a decrease of 166,659 from the previous week, and 1,559,654 less than the same time last year.